Samruk Kazyna’s Secret Strategy

By our estimates, national welfare fund Samruk Kazyna is and for a long time will be one of the most non-transparent state companies in Kazakhstan. Not only due to its gigantic size, multi-level managerial structure and diversity of its sub-companies, but also due to a clear lack of interest of top-management of the government holding in increasing transparency.

Let us prove this statement with a concrete fact.

On April 20 2018 AO Samruk Kazyna announced that it has developed a new development strategy. Let us quote the press-statement of the state development agency in its entirety (underlining made by us).

«AO Samruk Kazyna has adopted a new development strategy for 2018-2028 and has renewed the Transformation Program. The document was developed taking into account the plethora of experience of leading sovereign funds, such as Temasek (Singapour), Khazanah (Malaysia) and Mubdala (UAE), operational and investment activity of which is completely oriented towards a commercial focus.

Thus, the Fund’s main priority is to improve the national welfare, through the increase in the profitability of portfolio companies.

The Strategy includes three key goals: improvement of the efficiency of companies, efficient portfolio management and sustainable development. These goals will be achieved through the following four strategic initiatives:

The first is to increase the profitability of companies by strengthening the financial sustainability, implementing the Transformation Programme and identifying potential through digitalization, business optimization and organizational structure;

 The second is to optimize the portfolio structure. It is planned to complete the Privatisation Programme, revise the portfolio of investment projects and attract strategic partners through the sale of non-strategic assets;

Third is to diversify income aimed at developing private capital through effective co-investment with the Kazakh business and foreign partners;

The fourth is to enhance corporate governance and sustainable development.

Implementation of these goals will allow introducing the Fund’s new structure, strengthening financial stability, increasing investment attractiveness, ensuring effective cash management and asset growth. To fulfill efficiently the tasks above, the Fund’s assets portfolio will be restructured.

To date, the Fund’s assets represent a complex 5-6 level structure, including 332 companies, thus making management considerably difficult. In accordance with the Comprehensive Privatization Plan, 51 companies will be withdrawn from the structure of the Fund; in order to reinvest the proceeds, it is planned to withdraw from 102 assets.

Thus, the Fund’s structure will be reduced from 332 to 179 companies and will consist of three management levels. As a result of the above measures, the management structure will become more lean.

The new Strategy indicates that the Fund Management Board will carry out the strategic oversight of the international investment portfolio. The advantages of these investments will be the reduction of the participation in the economy, prevention of outflow of local investors, strengthening of the presence at the international level and obtaining benefits in the form of new technologies and knowledge.

According to the new Strategy, social investments will be directed only to the creation of human capital, education and innovation by the example of Temasek and Khazanah funds.

It should be noted that yesterday, on April 19 this year, the President of the Republic of Kazakhstan Nursultan Nazarbayev approved and adopted the Fund Development Strategy for 2018-2028 and Transformation Program at the SK board meeting».

We had to resort to quoting the press-release in its entirety, because all of our efforts to find such an important document on the AO Samruk Kazyna website, in order to examine it, came up empty. Moreover one of the comments by the press-service to the visitors of the website, under the article said: «You can learn more about the Fund’s strategy for development at our website in the section ‚About the Fund‘. Link:  https://sk.kz/about-fund/strategy-and-mission/». When following this link a new windows open, in which there is even less information on the ‘Strategy for development for 2018-2028’ than there is in the press-release.

Thus, top-management of the National welfare fund Samruk Kazina, doesn’t think it is their responsibility to disclose or public view the document, in which it has formulated its development strategy for the next decade. The public on the other hand, isn’t interested in it, otherwise there would long be a scandal in the media and internet-communities on the subject. In turn, Akorda doesn’t’ find it necessary to insist that such strategic documents be available for everyone. And this means that the national welfare fund is destined to remain a closed off structure.

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